IN 2014 Andrew McAfee and Erik Brynjolfsson of the Massachusetts Institute of Technology published “The Second Machine Age”. The book was a balanced portrait of how new digital technologies were poised to improve society, even as they increased unemployment and depressed wages. In their latest work, “Machine, Platform, Crowd”, the authors seek to explain the business implications behind these developments.

Mr McAfee and Mr Brynjolfsson believe that the latest phase of computers and the internet have created three shifts in how work happens. The first is artificial intelligence (AI): a move from man to machine. In the past people worked with computers and, at the same time, were augmented by them: what the authors call the “standard partnership”. But that model is breaking down as computers improve and take more control.

You need only look at self-driving cars, online language translation and Amazon’s prototype cashierless shops to see that something big is happening. Digital technologies used to be applied to information—first numbers and text, and, later, music and video. Now, the digital technologies are invading the physical world.

For instance, designing a “heat exchanger”, a part in appliances like refrigerators, means balancing many different specifications and constraints. Humans settle for one that works well enough because to find the optimal one is too hard. But new “generative design” means AI-infused software can run zillions of tiny permutations to find the best possible design—one that a human might not come up with. And with 3D printing, those designs might be shared, modified and manufactured anywhere. Read the rest of this entry »

Your smartphone allows you to get almost instantaneous answers to the most obscure questions. It also allows you to waste hours scrolling through Facebook or looking for the latest deals on Amazon.

More powerful computing systems can predict the weather better than any meteorologist or beat human champions in complex board games like chess.

But for several years, economists have asked why all that technical wizardry seems to be having so little impact on the economy. The issue surfaced again recently, when the government reported disappointingly slow growth and continuing stagnation in productivity. The rate of productivity growth from 2011 to 2015 was the slowest since the five-year period ending in 1982.

One place to look at this disconnect is in the doctor’s office. Dr. Peter Sutherland, a family physician in Tennessee, made the shift to computerized patient records from paper in the last few years. There are benefits to using electronic health records, Dr. Sutherland says, but grappling with the software and new reporting requirements has slowed him down. He sees fewer patients, and his income has slipped.

ALPHAGO, the artificial intelligence system built by the Google subsidiary DeepMind, has just defeated the human champion, Lee Se-dol, four games to one in the tournament of the strategy game of Go.

Why does this matter? After all, computers surpassed humans in chess in 1997, when IBM’s Deep Blue beat Garry Kasparov. So why is AlphaGo’s victory significant?

Like chess, Go is a hugely complex strategy game in which chance and luck play no role. Two players take turns placing white or black stones on a 19-by-19 grid; when stones are surrounded on all four sides by those of the other color they are removed from the board, and the player with more stones remaining at the game’s end wins. Read the rest of this entry »

Wasabi Waiter looks a lot like hundreds of other simple online games. Players acting as sushi servers track the moods of their customers, deliver them dishes that correspond to those emotions, and clear plates while tending to incoming patrons. Unlike most games, though, Wasabi Waiter analyzes every millisecond of player behavior, measuring conscientiousness, emotion recognition, and other attributes that academic studies show correlate with job performance. The game, designed by startup Knack.it, then scores each player’s likelihood of becoming an outstanding employee.

Knack is one of a handful of startups adapting big data metrics to hiring. The companies are pitching online games and questionnaires to corporate recruiters frustrated by the disconnect between a good interview and an ideal employee. Based on records of how star workers responded to the same tests, these services predict whether a candidate will be suited for a particular job. Clients use the tool to help winnow piles of applications. “People are our biggest resource, and right now a lot of them are mismatched,” says Erik Brynjolfsson, an adviser to Knack and director of the Center for Digital Business at the Massachusetts Institute of Technology Sloan School of Management. Read the rest of this entry »

IN HIS first novel, “Player Piano” (1952), Kurt Vonnegut foresaw that industry might one day resemble a “stupendous Rube Goldberg machine” (or as Brits would say, a Heath Robinson contraption). His story describes a dystopia in which machines have taken over brain work as well as manual work, and a giant computer, EPICAC XIV, makes all the decisions. A few managers and engineers are still employed to tend their new masters. But most people live in homesteads where they spend their time doing make-work jobs, watching television and “breeding like rabbits”.

It is impossible to read “Player Piano” today without wondering whether Vonnegut’s stupendous machine is being assembled before our eyes. Google has designed self-driving cars. America’s military-security complex has pioneered self-flying killing machines. Educational entrepreneurs are putting enlightenment online. Are we increasingly living in Vonnegut’s dystopia? Or are the techno-enthusiasts right to argue that life is about to get a lot better?

Two things are clear. The first is that smart machines are evolving at breakneck speed. Moore’s law—that the computing power available for a given price doubles about every 18 months—continues to apply. This power is leaping from desktops into people’s pockets. More than 1.1 billion people own smartphones and tablets. Manufacturers are putting smart sensors into all sorts of products. The second is that intelligent machines have reached a new social frontier: knowledge workers are now in the eye of the storm, much as stocking-weavers were in the days of Ned Ludd, the original Luddite. Bank clerks and travel agents have already been consigned to the dustbin by the thousand; teachers, researchers and writers are next. The question is whether the creation will be worth the destruction. Read the rest of this entry »